UNITED STATES — “The block-chain is simply the future of transactions, it’s potential is to transform everything from how we send money to how communities grow.”
I’ve never heard of the block-chain before. What exactly is it?- If you’re not familiar with the block-chain, and it’s still a relatively new concept in the world of electronic finance, you no doubt will have heard of Bitcoin. Bitcoin is a peer-to-peer electronic cash system, also known as “cryptocurrency”, which is simply allows people too make anonymous transactions on-line. However, Bitcoin records every single transaction made on its network in a public record. This is known as the “block-chain”. How does Bitcoin work?- Bit-coins have to be “mined” using specialist mining software, which then carries out a series of intensive calculations to find a certain data sequence, or “block”. The block produces a specific data pattern when the Bitcoin “hash” algorithm is applied to the data. Whoever manages to do this will basically win bit-coins, which they can then spend in a range of places online and off. How many “blocks” exist on the block-chain?- There is a countless number of blocks on the block-chain at any one time – as soon as one block gets completed, another is automatically generated. Can Bitcoin transactions be traced easily on the block-chain?- Yes. All the blocks are added to the block-chain in a linear, sequential order. Each block contains a hash of the previous block, creating a linked series from the “genesis” block right the way through to the current one. As every Bitcoin user must have a Bitcoin address — a unique identifier that allows them to receive Bit-coins — the block-chain contains a complete set of information about every address using Bitcoin and their balances at any point in history.
So how do you keep track of all your bit-coins?- You’ll basically need something called a Bitcoin wallet: a free on-line wallet which you can use to make worldwide Bitcoin payments on your mobile or desktop. How can I get a Bitcoin wallet?- You’ll need to visit Blockchain.info to create your wallet. You’ll need to enter your email address and create a password, but it only takes a few seconds — and you can then send and receive Bitcoin payments immediately. Does this mean the Bitcoin block-chain works like a bank then?- No. You’re essentially your “own” bank; you have complete ownership over your currency and only you can check your Bitcoin balance, view your transactions and make payments.